Call for monetary policy autonomy

By Davison Vandira

ECONOMISTS say the use of the local currency should be non-negotiable and it ought to be backed by policies that reduce demand for foreign currency through transacting in the local currency for all goods and services.

Monetary policy independence through the use of local currency has proved key towards strengthening domestic industry value chains, with Russia a case in point in the face of sanctions from Western nations.

In response to Western sanctions imposed after its special military operation in Ukraine, Russia announced that it is now mandatory for all payments to be made in rubles and the decision has paid off in insulating the currency from losing value.

With the ruble this Tuesday clipping a more than two-year high to trade at 76.90 against the Euro, Zimbabwean economic analysts have called for the country to cease over-reliance on the US dollar in bench-marking prices.

“The autonomy function of the Zimbabwe monetary policy is very important from an economic perspective as it is used to control macro-economic fundamentals particularly productivity and inflation levels, which are all critical in determining the direction and rate of economic growth. However, the only challenge we currently have is lack of proper support mechanisms of the local currency to achieve the desired results,” said Mr Titus Mukove, a development economist.

Mr Kudakwashe Mugova, an economic analyst said, “The liberty to influence the economic destiny is second to none and can only be guaranteed by the continued use of the Zimbabwe dollar as authorities will have all the monetary instruments to deploy.”

Proponents of the continued use of the Zimbabwe dollar have singled out how Russia recently halted the depreciation of its currency by instructing all its trade partners to settle their bills using the Rouble.